Margin Call Liquidations

Hire a trusted margin call liquidations lawyer at Patil Law after you’ve suffered a significant investment loss caused by your account’s forced liquidation.

While it is true that even the most experienced investors take heavy hits, there are instances where these are not merely the result of normal market fluctuations, but rather the consequence of your brokerage firm’s wrongdoing.

Patil Law’s founder, Chetan Patil, has over 15 years of extensive experience in diverse, complex financial transactions across the country. To date, the law firm has recovered over $25 million on behalf of its clients. Feel free to browse through the firm’s impeccable track record.

Chetan specializes in litigations, trials, arbitrations, and appeals of complex securities, Financial Industry Regulatory Authority (FINRA) cases, and financial and business disputes, with an emphasis on securities, financial services, and financial regulatory law.

Why Choose Patil Law?

Patil Law’s clients will benefit from the depth and breadth of Chetan’s legal experience and judgment. He has handled and overseen over a thousand litigation and arbitration cases nationwide in federal and state courts and arbitration forums.

As a testament to their deep care and commitment, Chetan and his team of legal experts travel extensively for their clients all around the country.

They have represented defrauded investors, family trusts, family offices, public and private companies of all kinds, including banks and other financial institutions, broker-dealers, registered investment advisors, advisory firms, and securities brokers.

We operate on a contingency fee basis, which means we only get paid if we secure a favorable settlement or verdict for our clients. Call Patil Law now at (800) 950-6553 or send us a message through our secure and confidential online form. Our compassionate team of professionals is always on standby to provide urgent assistance.

What’s A ‘Margin Call’?

Investing in the stock market can be exhilarating, but it’s not without its share of unexpected twists. One such twist that can catch investors off guard is the dreaded margin call.

When you buy stocks on margin, you’re essentially borrowing money from your brokerage firm to increase your purchasing power. While this can amplify your potential gains, it also magnifies your risk.

There are three primary scenarios that can trigger a margin call:

Overextending Your Buying Power

Each margin account has a specific buying power, which is the maximum amount you can borrow to purchase securities.

If you exceed this limit, your brokerage firm will issue a margin call, requiring you to deposit additional funds or securities within a set timeframe. Failure to meet this deadline can result in the liquidation of your holdings.

Declining Account Value

Margin accounts are subject to maintenance requirements set by both FINRA and individual brokerage firms. Generally, your account equity must not fall below 25% of the current market value of the fully paid securities in your account.

However, firms can set higher “house” requirements at their discretion. If your account value dips below these thresholds, you’ll receive a margin call.

Raised House Requirements

Even if you haven’t made any trades or experienced a decline in your account value, you can still face a margin call if your brokerage firm decides to raise its house maintenance requirements.

This can happen when a company you’ve invested in becomes bankrupt, gets delisted, or experiences significant volatility. Firms may also apply higher requirements to specific industries or sectors.

It’s crucial to understand that brokerage firms have the right to change their house requirements at any time without prior written notice. This means that even if you’ve carefully managed your margin account, you could still find yourself in a challenging situation.

Does My Brokerage Firm Have To Issue A Margin Call Before Selling?

A firm isn’t required to notify you if your account equity drops below the minimum maintenance equity. Firms don’t have to issue a margin call before selling securities in your margin account to meet a margin call and may sell enough securities to completely pay off your margin loan, not just meet the margin call.

Additionally, firms also don’t have to let you choose which securities or assets are sold to meet a margin call.

What Is Forced Liquidation?

Forced liquidation or forced selling can occur within an investor’s margin account if the investor fails to bring their account above the minimum requirements after being issued a margin call.

It generally occurs after the broker issues warnings regarding an account’s under-margin status. Should the account holder choose not to meet the margin requirements or simply fail to pay them, the broker has the right to sell off the current positions.

Can I Sue My Broker or Investment Adviser After A Forced Liquidation?

In the aftermath of a forced liquidation, it’s natural to feel powerless and unsure of your next steps. While it may seem like the broker or investment adviser was simply following the terms of your account agreement, there could be more to the story. If you suspect that your financial advisor or brokerage firm acted improperly, you may have grounds for legal action.

It’s important to understand that while you may not be able to challenge the specific issuance of margin calls or forced liquidations, this doesn’t mean that the broker or investment adviser is completely free from any fault. The real question is whether the recommendation to open the account was suitable for you in the first place.

Every investor has a unique investment profile, which takes into account factors such as risk tolerance, financial goals, and overall financial situation. If your broker or financial advisor recommended an account that was incompatible with your profile, exposing you to unnecessary risk, they may have breached their duty to you.

By working with an experienced securities attorney, you can explore your legal options and potentially recover some or all of your losses. Remember, just because a forced liquidation occurred doesn’t mean that everything leading up to it was above board. Don’t hesitate to seek legal guidance from Patil Law.

Understanding FINRA Rule 4210

FINRA Rule 4210 governs margin requirements relating to covered agency transactions. These include:

(1) ‘To be announced’ transactions, inclusive of adjustable-rate mortgage transactions;

(2) Specified pool transactions; and

(3) Transactions in collateralized mortgage obligations, issued in conformity with a program of an agency or government-sponsored enterprise, with forward settlement dates.

Amendments to FINRA Rule 4210

It might be incredibly challenging for the average investor to stay up-to-date and fully understand the implications of updating and amending rules. For example, FINRA has issued recent amendments to Rule 4210.

At Patil Law, we pride ourselves on our deep knowledge of the ever-evolving regulatory landscape and our ability to navigate complex legal matters with skill and compassion.

We understand that dealing with stock market losses and potential misconduct can have the potential to derail your finances, which is why we’re here to provide the guidance and support you need.

Recovering Your Investment Losses From A Forced Liquidation

A skilled financial securities lawyer can help you take proactive steps to recoup your investment losses after a forced liquidation and hold those responsible accountable for their actions.

Watching your hard-earned investments disappear due to your brokerage firm’s carelessness and recklessness can be an emotionally devastating experience. Such a betrayal can leave you feeling helpless and unsure of where to turn.

You don’t have to face this difficult situation alone. At Patil Law, we can comprehensively discuss your legal options so you can make an informed and empowered decision.

Call A Top-Rated Investment Loss Lawyer Now

Consult with a reputable investment loss lawyer at Patil Law if you have suffered from your brokerage firm’s forced margin call liquidation. Remember, you have the right to expect a high level of diligence from your trusted advisors when it comes to protecting your investments and ensuring that your stockbroker is acting in your best interests. Don’t let their misconduct go unchallenged.

At Patil Law, we are committed to holding brokerage firms accountable when they neglect their duties and cause harm to innocent and hardworking investors. We have access to vast resources and a formidable network of legal and financial professionals who can build your case and fight for your rights.

If you or a loved one has experienced significant losses due to your account’s forced margin call liquidation, call us now at (800) 950-6553 for a free consultation or send us a message through our secure and confidential online form.